How Wall Street — Not Pensioners — Wrecked Detroit

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Source: Demos

Commissioned by the think tank Demos, the new report out today from former investment banker Wallace Turbeville shows that contrary to the myths about a bloated municipal government overspending on lavish social services, Detroit’s “overall expenses have declined over the last five years” by $419 million thanks to the city “laying off more than 2,350 workers, cutting worker pay, and reducing future healthcare and future benefit accruals for workers.” Today, Turbeville notes that “Detroit has a significantly smaller workforce per capita than comparable cities.” Yet, those draconian cuts still left the city with an annual $198 million shortfall because of three big problems – none of which has anything to do with supposedly greedy public workers and their allegedly overly “generous” pension benefits.

Detroit’s emergency manager, Kevyn Orr, asserts that the city is bankrupt because it has $18 billion in long-term debt. However, that figure is irrelevant to analysis of Detroit’s insolvency and bankruptcy filing, highly inflated and, in large part, simply inaccurate. In reality, the city needs to address its cash flow shortfall, which the emergency manager pegs at only $198 million, although that number too may be inflated because it is based on extraordinarily aggressive assumptions of the contributions the city needs to make to its pension funds.

2. Who is Demos?

I have a relative who is in a pickle because of this Detroit mess. She lives in a nearby city and has had medical problems resulting in long-term therapy/nursing care. Thinking she had enough saved up to care for her medical needs in old age, she is now in a situation where that may not happen. Many houses around her are selling for low prices ($40-60K) or not at all. Her house should have been in the $150-200K range, but no more. She was depending on that house and her savings to get her through.

I'd sure like to get some good information out of Detroit to see if there are any chances the pressure will ease in the near future so home sales will recover? I suppose I know the answer, but we can hope.

It's a damned shame to work all your life and save, then have your home value and pensions shaved or pulled.

6. Judge Steven Rhodes (selected) to oversee Detroit bankruptcy

Alice Moore Batchelder (born August 15, 1944) is an American attorney and jurist. She currently is chief judge of the United States Court of Appeals for the Sixth Circuit and was considered by President George W. Bush as a potential nominee for a U.S. Supreme Court seat that ultimately went to Justice Samuel Alito. Her husband William G. Batchelder is a former state Court of Appeals judge and a state legislator, who has served more than 30 years in the Ohio House of Representatives and currently serves as Speaker of the House...Read More

11. Welcome to DU!

9. As I've been arguing with people about Illinois's pension issues, I keep hearing...

"Illinois's going to be another Detroit!!" Of course, nobody has the first fucking clue what that means but it sounded good when they heard the local RWNJ radio guy say it and again when their friends repeated it so it must be right.

10. K & R

12. I am sick to death of the narrative that workers kill businesses...

that making mortgages available to the poor killed Wall Street and the economy, that unions killed Detroit and the auto industry, and the idea that anyone who is due a pension isn't at the top of the fucking list of obligations in a bankruptcy case. These people gave their lives, the entirety of their time on this planet to be a productive member of society for the promise of a comparatively meager stipend, and it's on the chopping block so some fucking rich beyond rich banker can turn a profit off of decay and neglect.

Pensions are a promise and in cases like this everyone willingly agreed to them, so they are an obligation that should never be questioned. These people worked their careers at low paying and oftentimes repetitive jobs, sticking it out for the sake of their retirement, a better life just over the horizon where they could live a little and not be a burden to their children or anyone else.

They fixed your sewers in the middle of the winter, plowed your roads, and cleaned up after storms. They kept public transportation moving getting people to and from work. They put out fires and answered emergency calls. They protected the soft underbelly of the city you don't think about, because they protect it so well you don't have to. They did their best knowing they served their fellow citizens.

They are not takers. Every time the city worked, when it appeared that things just ran themselves, it's because they made it work. We owe them what they were promised. We do not owe some rich thugs shoving their way to the front of the line. No, the robber barons can get in line, somewhere far behind those who paid for their pension with their lives.

15. Retirement Heist- How Companies Plunder and Profit From the Nest Eggs of American Workers

Retirement Heist

A little over a decade ago, most companies had more than enough set aside to pay the benefits earned by two generations of workers, no matter how long they lived. But by exploiting loopholes, ambiguous regulations, and new accounting rules, companies essentially turned their pension plans into piggy banks, tax shelters, and profit centers.
Drawing on original analysis of company data, government filings, internal corporate documents, and confidential memos, Schultz uncovers decades of widespread deception during which employers have exaggerated their retiree burdens while lobbying for government handouts, secretly cutting pensions, tricking employees, and misleading shareholders

Corporation have used a blue print to screw people out of Pensions around the globe for higher profits, they have become ruthless knowing they have placed themselves in corporate friendly states with installed judges that will rule in favor of corporations.

Look at the chart, Oct 2008 IBM The Great Screwing Begins., IBM stock started to climb during the beginning of the Great Recession, hence Retirement Heist.